10 Golden Rules in Forex Trading

10 golden trading rules that lie atop the war chest of each and every successful trader

By Roman Keane

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Copyright 2011 by Roman Keane and Market Navigator Group

ForewordIn this short report, I would like to address the 10 MOST important,

golden rules in trading that you MUST always follow strictly. I have

to repeat here, these are the 10 golden rules that you MUST always

follow strictly if you want to be a profitable traders. These rules

seem to be simple and trivial but they play a crucial part in your

trading success and just by knowing and applying them, you are

already halfway to be a good trader.

RULE #1: “Follow the system, limit your losses and you will succeed!”

I am going to make this first point very clear, because I strongly believe it is the most

important factor to remember. In order to be a successful Forex trader, you must be

willing to take your profits and not looking back. The #1 mistake I see currency

traders make is to hang on a position for too long. They seem to think that this is the

trade where they can get 100+ pips and just forget about what their system is telling

them to do.

The main reason trading systems are in place is to help growing your account steadily

while limiting your losses. By controlling the amounts you are going to profit/lose, you

will be a long-term winner by keeping control of your trading account. It’s really

frustrating and sad to have a trader e-mail me and tell me he lost his whole account

because he held on to a position for too long and ended up losing 50% of his money on

the trade. So, grow steadily, consistently, safeguard your base first and then the profits

will take care of themselves.

RULE #2: “Plan your trades first, and then trade what your plan is telling you”

Next, you need to focus on planning your trades first, and then trading your plan.

Your job as the trader is to follow a strict trading plan. Do you know who is going to

write the trading plan? You are! After you write this plan, your job is just a breeze

because all you have to do is follow the trading plan you have devised yourself.

All you need to do is follow the rules of your trading plan which should have a setup,

entry, and exit. If you are doing anything else, then you are simply complicating your

job more than it needs to be.

RULE #3: “Don’t trade more than you can afford”

It never ceases to amaze me how many traders want to invest their life savings into high

risk investments. On any given day, any trade can go from good to bad in a matter of

minutes. Do not trade more then you can lose! While systems, trends, and services

are all made to help you improve your profits and keep you from losing, sometimes it is

inevitable that you will have a bad day.

I recommend trading in these terms, if your overall bankroll for trading is $50,000 then

never invest more then 2-3% on any one trade. This would amount to a max of $1,500

per trade. Stick to your principles regarding money management and your system and

you will do well in this business. Just imagine if you were to invest all your money on

one trend one day. What if all of a sudden the trend took a steep downhill and you lost

50% of your total money on that trade? How would you feel after that? Not only

would it take months to work your money back up, you would lose a lot of confidence

in your trading ability.

RULE #4: Don’t think of this in terms of cash, think of this in terms of pips”

One of my first advices to my students is once you put the money in your trading

account, forget it is even cash. It’s harder to execute trades when you think of them in

turns of dollar bills. It’s better to try and just win pips.

Have you ever wondered why at the casino all they use is chips? It’s because

psychologically, a gambler is much more likely to gamble more, and with less worry if

they are just throwing around chips. Well, this isn’t quite gambling, but the same

concept should be used with Forex. Try to win pips, don’t think about winning money.

RULE #5:”You are the boss”

Remember, you’re the boss of every trade you put into action, you are the one that is

responsible for failure or success. You will not have anyone telling you to put in this

trade or study this chart. You must be a self-starter and have an entrepreneurial spirit

to do this day in and day out.

If you have never “been the boss” before then you will learn how much of a

responsibility you are about to undertake. You cannot find yourself getting too stressed

out at the market or market makers. Negative emotions will get you in a lot of trouble

and will show on your trades. Be sure to follow your systems and not your emotions!

RULE #6: “Be careful of your language and how you treat yourself”

If you beat yourself up for making a bad trade, then you will never be able to move on

to make the good trades. Your mind does not respond well to repeated abuse. Be sure

to keep in perspective of how you act when you win and win you lose.

Losing is a part of this game, and if you can’t deal with it, then you are in the wrong

game.

RULE #7: “Fewer trades are better!”

Too many times I see my eager students, newbie or veteran traders alike, want to get

involved in way too many trades too quick. They just trigger the buy/sell happily and

want to make a move on every apparent trend or move they see. Dangerous, that is

deadly dangerous.

My advice is until you really get a grip on trading is to not make more then 2-3 trades at

a time until you really get a handle. I know this is contradictory to what many experts

say, but from my experience it can save you a lot of headache and money. The key

here is to control… do not be greedy and only trade with the BEST setups with the

HIGHEST winning probability, and never, never force any trade.

RULE #8: “Don’t consume your life with trading, enjoy life!”

I understand how exciting trading can be, but it shouldn’t be your life. If you allow yourself to be consumed by trading 99% of your day, then in the end, your life will be very sad. You need to get out and socialize with people, enjoy life! Take some of your profits, go on a vacation, and find new interests.

After working with traders for so long, I began to notice a trend in most of them. For a lot of traders, they are in this because something is not right with their life. They are having problems with their family, at their work, or just in general. They almost look at trading as an escape from the world around them. Folks, this is the wrong reason to be in trading. Fix your life before trading and you will enjoy your time more!

RULE #9: “How a Real-Time Trader Keeps Organized”

The fact is, it’s rough out there for a real-time trader. You have to deal with data

coming at you literally every moment of your waking day. It becomes really hard to

keep the big perspective of making meaningful trades in your sight.

I highly recommend for any trader, especially real-time traders to keep a traders diary.

At the end of the day, you should be able to say “Hello Diary, today I made this trade

because of this..” , “I probably acted the wrong way on this trade.. I won’t make that

mistake again..” , “Diary, this trend is really working well, keep track of it in future

trades.”

It doesn’t matter how you do it, whether it be written or just a blank Microsoft Word

document, the fact is it will help. You’re the only one that is going to be looking at this

document, so it doesn’t matter how you write it, you just need to actually sit down and

write it!

RULE #10:“This isn’t gambling, this is trading!!”

I can’t stand watching Forex traders that make trades just for the rush of making a

trade. If you like throwing away your money, then go for it, but if you are here to make

profits then you NEED to follow the concrete signals, systems and solid rules.

If you are bored, go rent a movie, don’t think “Wow, I think I can pull out 5 pips really

quick if I do this, and if I lose who cares it’s just 5 pips.” My friend, that mentality will

destroy you in the long run of trading. Keep trading to trading and keep gambling to

gambling.

So, there you have the 10 golden trading rules that lie atop the war chest of each and

every successful trader

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